From floods to wildfires, the increase in extreme weather events across Canada is causing havoc for individuals and businesses from coast to coast. These catastrophes not only devastate communities but also put a strain on the insurance industry.
So, what does that mean for your month to month insurance premiums?
The fallout from extreme weather affects Canadian wallets in more ways than one; escalating reinsurance (insurance for insurance companies) costs and the depreciation of the Canadian dollar against the USD in 2023 have made prices soar.
The reinsurance puzzle: USD takes charge in reinsurance
Reinsurance is under strain due to increased weather disasters, as insurance companies have to rely on reinsurance for large losses. This translates into consistently large payouts over a short period of time, which hikes up reinsurance costs overall. This creates a domino effect that then burdens consumers, as these higher costs end up being reflected in their insurance premiums. On top of this, Canadian reinsurance is also purchased in USD. This is a double whammy for Canadians because the CAD dollar lost ground to the USD in 2023.
Weathering the storm: Mitigating risk and preparing to pay more
Communicating with insurance clients regarding weather events is crucial. Insurers can provide clear explanations for rate hikes and a strategy for risk mitigation. While there’s not much that individuals can do to prevent severe weather, preparedness and being properly informed on how to protect their assets goes a long way, and can help them prevent disaster; financial or otherwise.
Going into 2024
The rising tide of catastrophic weather-related losses, escalating reinsurance costs, and currency depreciation all add up to present what can feel like a stark reality for Canadian insurance consumers.
Extreme weather events remain a threat, and insurance companies are already strained under a high rate of claims. Insurance clients should be proactive by making sure they understand the factors driving their premium hikes, and taking action to mitigate risks.
They can do this by ensuring their coverages are up to date, as well as inquiring with their insurance provider about any security features that can help with loss prevention in the event of severe weather in their area.
These measures can not only reduce their monthly rates, but reduce the likelihood of having to file a claim in the first place.
As president of KBD, Curtis aims to simplify insurance for his clients. He’s helped lead KBD Insurance to become one of Canada’s fastest 400 growing companies according to the Globe & Mail.
